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With the second-quarter earnings season reaching the horizon, it’s the right time to reshuffle your portfolio and add some outperformers. A company immediately after an earnings release comes on the investors’ radar. While better-than-anticipated results make it a favored pick, a lag on expectations hits investor sentiment. So, earnings releases prove to be the right time for investors to put money into stocks or disinvest.
Overall, results have exceeded expectations this earnings season. Even the battered finance sector, weighed down by a regime of low interest rates, has surprised markets. Markets have also gained on many instances due to a flurry of encouraging earnings results.
How the Season has Unfold?
As of Aug 24, 2016, 483 S&P 500 members had posted their results. Together, they comprise nearly 97% of the index’s market cap, which means that they are more or less indicative of the entire earnings picture. Results have shown an improvement over the first quarter, although this may not be apparent at first glance. Earnings continued to decline on a yearly basis, but at a slower rate, however small.
Earnings of these companies have declined by 3.2% year on year though revenues have increased 0.1%. In the first quarter, earnings fell more than 6% year over year, at a faster clip than the second quarter. Considering the average of the trailing four-quarter earnings of the S&P 500 members, it comes down to 4.5%.
Out of the 483 S&P 500 members that have come up with their quarterly numbers as of Aug 24, approximately 72.3% have posted positive earnings surprises whereas 54% have surpassed the revenues estimates.
Time to Reshuffle Your Portfolio
Forget global headwinds, such as yet-to-recover Chinese economy, Brexit, softness in the Eurozone and fluctuating commodity prices and shift your focus on the following stocks. We have identified five stocks based on favorable Zacks Rank #1 (Strong Buy) or 2 (Buy), VGM Score of “A” or “B” and has posted a positive earnings surprise in the last reported quarter.
CONE Midstream Partners LP a master limited partnership focused on natural gas and condensate gathering in the Marcellus Shale in Pennsylvania, Ohio and West Virginia has a Zacks #1 (Strong Buy) and VGM Score of “A”. The company’s second-quarter earnings came in at 39 cents beating the Zacks Consensus Estimate of 36 cents. Its earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 19.4%. Moreover, the stock has long-term earnings growth rate of 13.4%.
We suggest investing in American Eagle Outfitters, Inc. (AEO - Free Report) , a specialty retailer of casual apparel, accessories and footwear. The company, which holds a Zacks Rank #2, came out with splendid second-quarter fiscal 2016 results, wherein both sales and earnings increased year over year and outdid estimates, thereby marking its seventh consecutive positive earnings surprise. Quarterly earnings of 23 cents per share surged 35.3% from 17 cents recorded in the prior-year quarter and beat the Zacks Consensus Estimate of 21 cents. Additionally, the stock has a long-term earnings growth rate of 12.1% and a VGM Score of “A”.Its earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 9.3%.
Big Lots Inc. (BIG - Free Report) , a broad-line closeout retailer in the United States, currently has a Zacks #2 and a VGM Score of “A”. The company’s impressive earnings surprise history, comparable-store sales growth in the past 10 straight quarters and an encouraging earnings outlook for fiscal 2016 clearly suggest that its strategic endeavors are well on track to continue the momentum. Big Lots reported second-quarter fiscal 2016 adjusted earnings per share of 52 cents that beat the Zacks Consensus Estimate of 45 cents and also increased 26.8% year over year. Also, earnings surpassed the company’s guided range of 42−47 cents. Moreover, the stock has a long-term earnings growth rate of 13.5%. Its earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 8%.
UnitedHealth Group Incorporated (UNH - Free Report) a diversified health and well-being company is consistently gaining from robust Medicaid and Medicare businesses. The company reported second-quarter 2016 earnings of $1.96 per share, beating the Zacks Consensus Estimate of $1.89. Earnings improved 13% year over year. The earnings beat came on the back of higher revenues. Strong results from the health services business Optum, and membership increase contributed to the outperformance. The Zacks Rank #2 (Buy) company currently has a VGM Score of “A”. Its earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 2.9%. Moreover, the stock has long-term earnings growth rate of 13.4%.
Ralph Lauren Corporation (RL - Free Report) , a major designer, marketer and distributor of premium lifestyle products emerged stronger in first-quarter fiscal 2017 as its top and bottom lines exceeded expectations. This also marked the company’s sixth consecutive earnings beat. Results in the quarter gained from the company’s improved sales mix and inventory control initiatives, which aided gross margins as well. Also, the company attained better-than-expected operating margins. Ralph Lauren reported adjusted earnings of $1.06 per share, which fared better than the Zacks Consensus Estimate of 89 cents. The Zacks Rank #2 company currently has a VGM Score of “A”. Its earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 10.1%. Moreover, the stock has a long-term earnings growth rate of 7.9%.
Where Do Zacks' Investment Ideas Come From?
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>
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5 Earnings Season Winners to Buy in September
With the second-quarter earnings season reaching the horizon, it’s the right time to reshuffle your portfolio and add some outperformers. A company immediately after an earnings release comes on the investors’ radar. While better-than-anticipated results make it a favored pick, a lag on expectations hits investor sentiment. So, earnings releases prove to be the right time for investors to put money into stocks or disinvest.
Overall, results have exceeded expectations this earnings season. Even the battered finance sector, weighed down by a regime of low interest rates, has surprised markets. Markets have also gained on many instances due to a flurry of encouraging earnings results.
How the Season has Unfold?
As of Aug 24, 2016, 483 S&P 500 members had posted their results. Together, they comprise nearly 97% of the index’s market cap, which means that they are more or less indicative of the entire earnings picture. Results have shown an improvement over the first quarter, although this may not be apparent at first glance. Earnings continued to decline on a yearly basis, but at a slower rate, however small.
Earnings of these companies have declined by 3.2% year on year though revenues have increased 0.1%. In the first quarter, earnings fell more than 6% year over year, at a faster clip than the second quarter. Considering the average of the trailing four-quarter earnings of the S&P 500 members, it comes down to 4.5%.
Out of the 483 S&P 500 members that have come up with their quarterly numbers as of Aug 24, approximately 72.3% have posted positive earnings surprises whereas 54% have surpassed the revenues estimates.
Time to Reshuffle Your Portfolio
Forget global headwinds, such as yet-to-recover Chinese economy, Brexit, softness in the Eurozone and fluctuating commodity prices and shift your focus on the following stocks. We have identified five stocks based on favorable Zacks Rank #1 (Strong Buy) or 2 (Buy), VGM Score of “A” or “B” and has posted a positive earnings surprise in the last reported quarter.
CONE Midstream Partners LP a master limited partnership focused on natural gas and condensate gathering in the Marcellus Shale in Pennsylvania, Ohio and West Virginia has a Zacks #1 (Strong Buy) and VGM Score of “A”. The company’s second-quarter earnings came in at 39 cents beating the Zacks Consensus Estimate of 36 cents. Its earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 19.4%. Moreover, the stock has long-term earnings growth rate of 13.4%.
We suggest investing in American Eagle Outfitters, Inc. (AEO - Free Report) , a specialty retailer of casual apparel, accessories and footwear. The company, which holds a Zacks Rank #2, came out with splendid second-quarter fiscal 2016 results, wherein both sales and earnings increased year over year and outdid estimates, thereby marking its seventh consecutive positive earnings surprise. Quarterly earnings of 23 cents per share surged 35.3% from 17 cents recorded in the prior-year quarter and beat the Zacks Consensus Estimate of 21 cents. Additionally, the stock has a long-term earnings growth rate of 12.1% and a VGM Score of “A”.Its earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 9.3%.
Big Lots Inc. (BIG - Free Report) , a broad-line closeout retailer in the United States, currently has a Zacks #2 and a VGM Score of “A”. The company’s impressive earnings surprise history, comparable-store sales growth in the past 10 straight quarters and an encouraging earnings outlook for fiscal 2016 clearly suggest that its strategic endeavors are well on track to continue the momentum. Big Lots reported second-quarter fiscal 2016 adjusted earnings per share of 52 cents that beat the Zacks Consensus Estimate of 45 cents and also increased 26.8% year over year. Also, earnings surpassed the company’s guided range of 42−47 cents. Moreover, the stock has a long-term earnings growth rate of 13.5%. Its earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 8%.
UnitedHealth Group Incorporated (UNH - Free Report) a diversified health and well-being company is consistently gaining from robust Medicaid and Medicare businesses. The company reported second-quarter 2016 earnings of $1.96 per share, beating the Zacks Consensus Estimate of $1.89. Earnings improved 13% year over year. The earnings beat came on the back of higher revenues. Strong results from the health services business Optum, and membership increase contributed to the outperformance. The Zacks Rank #2 (Buy) company currently has a VGM Score of “A”. Its earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 2.9%. Moreover, the stock has long-term earnings growth rate of 13.4%.
Ralph Lauren Corporation (RL - Free Report) , a major designer, marketer and distributor of premium lifestyle products emerged stronger in first-quarter fiscal 2017 as its top and bottom lines exceeded expectations. This also marked the company’s sixth consecutive earnings beat. Results in the quarter gained from the company’s improved sales mix and inventory control initiatives, which aided gross margins as well. Also, the company attained better-than-expected operating margins. Ralph Lauren reported adjusted earnings of $1.06 per share, which fared better than the Zacks Consensus Estimate of 89 cents. The Zacks Rank #2 company currently has a VGM Score of “A”. Its earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 10.1%. Moreover, the stock has a long-term earnings growth rate of 7.9%.
Where Do Zacks' Investment Ideas Come From?
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>